US risks Argentine wrath as as American firm signs Falklands oil deal

The United States risks being dragged into the growing political row over the
Falkland Islands’ oil industry, after Texas-based Noble Energy became the
first American firm to sign an exploration deal in the disputed territories.

Argentina's move threatens to further antagonise the UK government on the 30th anniversary of the war the two fought over the Falkland IslandsPhoto: Reuters

The United States risks being dragged into the growing political row over the Falkland Islands’ oil industry, after Texas-based Noble Energy became the first American firm to sign an exploration deal in the disputed territories.

In a sign of the heightened tensions in the area, Noble’s deal with Falkland Oil and Gas Limited (FOGL) came as Venezuela said it would team up with Argentina to search for oil in waters neighbouring the Falklands.

The agreement between Noble and FOGL will see Noble invest between $180m and $230m for a 35pc in 10m acres of exploration licenses to the south and east of the disputed islands. The move follows a subsidiary of French energy giant EDF also buying into FOGL’s licences earlier this year.

Analysts said it was significant that Noble hailed from America - whose administration has refused to endorse British sovereignty of the Falkland Islands. Argentina claims sovereignty of the islands it calls Las Malvinas and has threatened to sue oil explorers.

The US maintains a position of “neutrality”, saying it recognises the “de facto UK administration” but takes no position on sovereignty claims. US Secretary of State Hillary Clinton has backed Argentine calls for the UK and Argentina to hold talks on the issue, which the UK has resisted.

Ian McLelland of Edison Investment Research said: “We know that some companies have avoided entering the Falklands because of its geographical location.

"In particular this would affect companies with direct exposure to Latin America but potentially also those with more general investment in the Americas. The fact that a US company like Noble is entering the region is therefore of significance.”

FOGL’s chief executive Tim Bushell said that its choice of Noble had not been “politically motivated”, but added he thought any US company looking to invest anywhere new in the world would first seek advice from the US State Department. FOGL’s shares leapt 14.7pc as analysts said the tie-up with Noble was a good deal.

Neither Noble nor the US State Department commented on the political issue last night, but Noble said that “after careful study” it believed the region was “very consistent” with its strategy.

The deal was announced as Venezuelan state oil giant PDVSA said it was in talks with Argentina’s YPF over oil exploration in waters neighbouring the Falkland Islands.